24 State Power and the Structure of International Trade
These arguments, and the implications of other ideal typical configurations of
potential economic power for the openness of trading structures, are summarized
in [Chart 1].
THE DEPENDENT VARIABLE: DESCRIBING THE STRUCTURE
OF THE INTERNATIONAL TRADING SYSTEM
The structure of international trade has both behavioral and institutional attributes.
The degree of openness can be described both by the flow of goods and by the
policies that are followed by states with respect to trade barriers and international
payments. The two are not unrelated, but they do not coincide perfectly.
In common usage, the focus of attention has been upon institutions. Openness
is associated with those historical periods in which tariffs were substantially lowered:
the third quarter of the nineteenth century and the period since the Second World
Wa r.
Tariffs alone, however, are not an adequate indicator of structure. They are
hard to operationalize quantitatively. Tariffs do not have to be high to be effective.
If cost functions are nearly identical, even low tariffs can prevent trade. Effective
tariff rates may be much higher than nominal ones. Nontariff barriers to trade,
which are not easily compared across states, can substitute for duties. An undervalued
exchange rate can protect domestic markets from foreign competition. Tariff levels
alone cannot describe the structure of international trade.
A second indicator, and one which is behavioral rather than institutional, is
trade proportions—the ratios of trade to national income for different states. Like
tariff levels, these involve describing the system in terms of an agglomeration of
national tendencies. A period in which these ratios are increasing across time for
most states can be described as one of increasing openness.
A third indicator is the concentration of trade within regions composed of states
at different levels of development. The degree of such regional encapsulation is
determined not so much by comparative advantage (because relative factor
endowments would allow almost any backward area to trade with almost any
developed one), but by political choices or dictates. Large states, attempting to
protect themselves from the vagaries of a global system, seek to maximize their
CHART 1. Probability of an Open Trading Structure with Different
Distributions of Potential Economic Power